3 Min. Gold News – Jim Rickards – BBC Radio 4 – Oct. 21, 2013

3 Minute Gold News

A Quick Read for Busy People.

3 minute synopsis of the recent video interview with Jim Rickards, author of Currency Wars, Senior Managing Director at Tangent Capital, by Liam Halligan from BBC Radio 4.

Topics:

Currency Wars
Eastern Trading Partners
War
QE
Inflation

Jim Rickards

BBC Radio 4
Liam Halligan
Interview with Jim Rickards
October 21, 2013

CURRENCY WARS

When you’re in a currency war you’re trying to cheapen your currency relative to your trading partners as a matter of policy.

There are good fundamental reasons for a currency to fluctuate: changes in comparative advantage, demographics, technology, etc.

Currency wars are different. It’s when exchange rates change, not because of fundamentals, but deliberately in order to steal trading advantage from their partners.

There’s no question that the United States, the U.K., and other western countries are doing this.

EASTERN TRADING PARTNERS

We are annoying, baffling and confusing our eastern trading partners. We are also angering them.

60% of the world’s reserves are in U.S. dollars. All of those reserves are being held by our trading partners, the majority being held by emerging markets, including China.

The FED’s attitude to the rest of the world is “My printing press is bigger than yours.”. For some of these emerging markets, that’s true, they are not in a position to fight the currency wars head-on-head in terms of interest rates.

So they resort to other things: capital controls, import tariffs, export subsidies.

WAR

This is how currency wars turn into trade wars, and of course tragically in the thirties, the trade wars turned into shooting wars.

QE
There is a $400 Billion dollar per year wealth transfer going on in the United States, from everyday American to the banks.

That’s because for banks the deposits are liabilities, but for citizens the deposits are assets. People are not getting any return on their savings.

So we are enriching the bankers.

When people talk about JP Morgan making $10s of Billions of dollars of profits, Jim believes that a trained pet could make that much money.  That if you give zero cost funds then anyone could make money.

Enriching bankers at the cost to everyday citizens tears at the social fabric of society.

INFLATION

What they’d like to do is get inflation around 2 1/2 – 3 % and keep it there for ten or fifteen years.

That cuts the value of the currency in half over that time period.

The policy makers think that if they do 3% inflation that citizens might not notice, and Jim also believes they may not notice. But the problem is that it’s not a stable system.

Inflation won’t go to 3% and stay there. Jim believes it will be 3% on its way to 7, 8 or 9%.

That inflation genie will be out of the bottle and impossible to put back.

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Wag the Dog (I Can Hear Drums)
words and music Elaine Diane Taylor
©2013 Intelligentsia Media Inc. All rights reserved.
SOCAN/ASCAP
Available soon on iTunes.

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Another Week on Wall Street
words and music Elaine Diane Taylor
©2013 Intelligentsia Media Inc. All rights reserved.
SOCAN/ASCAP
from the album Coins and Crowns

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